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Financing Global Trade in a Digital Age | HSBC | FF Virtual Arena #332
Épisode 858
jeudi 3 octobre 2024 • Durée 13:53
A third of global trade now comprises digital platforms and services.
But this shift means financial institutions face new pressure to change the way they do things. Vivek Ramachandran, leads Global Trade Solutions for HSBC, an institution with a long and rich trade history.
For the latest FF Virtual Arena, we caught up with him to get his perspective on what’s changing and, in advance of a Beijing hosted Sibos, what China and more broadly Southeast Asia’s role is in trade finance.
Watch the conversation to find out more.
A shifting landscape
In this insightful interview, Ramachandran gives us a solid overview of the current and future trends that are transforming the world of trade. HSBC have been in the business for more than 155 years and they continue to play a crucial role in the global trade finance ecosystem.
Our Virtual Arenas are all about speaking to the experts and as Head of Global Trade Solutions, Ramachandran knows a thing or two about this space. Of the insights we’re given, none is more interesting than how much trade in services has grown compared to traditional goods trade. Historically, trade was predominantly about shipping physical goods, but according to Ramachandran now services such as cloud solutions and digital platforms constitute nearly 30% of global trade. And according to the WTO, digitally delivered services now equate to 54% of all services exports in general. It makes a big difference. For banks like HSBC it means adapting to new business models and getting tooled up to support companies operating in this new age.
Global supply chains are being fundamentally reshaped due to factors such as geopolitical pressures, cost considerations, sustainability goals, and the need for resilience. As a result, Ramachandran points out that they’re becoming more complex – some are getting shorter and others are expanding. As businesses shift their supply chain strategies, the need to manage risks, and consider sustainability and the impact of trade on the environment, has become paramount. Like many, he believes that being sustainable is no longer a “nice to have” but a “must have” and companies are now expected to address environmental and social concerns not just within their own operations, but throughout their supply chains.
For Ramachandran, sustainability now includes transparency on issues like emissions, forced labor, and supply chain safety. Financial institutions like HSBC want to help their clients solve these issues but also be seen as experts in the matter.
New business models
We also find out about new business models in trade, especially in the realm of digital commerce. Given more and more B2B trade is now taking place digitally (as well as concerning digital services), there are increased challenges in understanding and managing new types of counterparties. Data also plays a role. Ramachandran discusses the anonymity of digital transactions and the new data these transactions generate, which require new digital decision-making tools and customer onboarding processes.
He also provides a balanced view of the impact that cutting edge technologies could have. While early discussions about distributed ledger technologies and blockchain were promising, the path forward appears to be more government-driven initiatives like the UK Electronic Trade Documentation Act and the adoption of electronic records transfer laws by countries like France, Germany, and Singapore. These initiatives are paving the way for the future of trade digitization, but like many speakers we talk to, Ramachandran emphasizes that technology must be seen as an enabler, not an end in itself.
Sibos and South East Asia
Of course, given the growth happening in the Asia-Pacific region, and particularly Southeast Asia, we wanted to know about developments in trade finance here. It’s a region at the heart of many of the global trends in trade, such as the restructuring of supply chains and the booming e-commerce sector. He highlights how countries like Vietnam, Malaysia, and Indonesia are becoming major hubs for new manufacturing supply chains, while Singapore leads in trade digitization. He praises Singapore for its innovative initiatives, including its National Trade Portal and its adoption of UN laws governing electronic trade.
We also hear about the annual Sibos event which this year is being hosted in Beijing, for the first time. The location potentially causes some difficulty to other attendees but Ramachandran expresses excitement about the opportunity this presents, particularly given China’s thriving digital economy and innovation in areas like deep-tier financing. He also notes that China remains the world’s largest exporter and is increasingly investing in overseas markets, offering numerous opportunities for both Chinese and global businesses. HSBC themselves have made strategic partnerships in China, to support e-commerce exporters with financing based on transaction data.
There are further points discussed so be sure to check out the whole interview and discover more great conversations just like this one on our website.
These Areas of Fintech Are Still Getting Plenty of Investment | FF Virtual Arena #331
Épisode 857
jeudi 26 septembre 2024 • Durée 29:59
These areas of fintech are still getting plenty of investment.
In a funding environment that has its ups and downs, there is definitely good news for startups seeking funding.
We had the pleasure of speaking to Andre De Haes, founder of Backed VC, to find out what being “a maverick fund” looks like in practice and what they look for in successful fintech founders and startups.
We talk about how the European funding environment has changed in recent years and much more.
A Maverick Fund
Backed VC are “determined to do European venture capital differently”. Certainly their brand sticks out as slightly more rock and roll than some of their venture capital compatriots. According to De Haes, doing things differently involves bold bets in under-invested sectors, long-term thinking, and a distinctive culture of founder engagement.
He gives examples of their early bets on blockchain gaming, an area that seemed unconventional at the time but has since produced massive valuations, particularly with investments like Axie Infinity and Immutable X. Backed’s approach is also reflected in how they interact with founders, a relationship that often includes excursions and activities, all in service of forging long-term partnerships that go beyond the traditional fund-founder dynamic.
They focus on a few specific verticals, one of which is fintech and De Haes explains that Backed’s sector choices were born out of strategic thinking. They honed in on four key multi-trillion dollar industries ripe for disruption: computational biology, manufacturing software, Fintech infrastructure, and AI-driven drug development. They’re certainly exciting on the face of it and not only do they hold tremendous potential for tech innovation but also provide Europe with a strategic advantage over the U.S. In the interview above, De Haes points out how few VCs are tackling these challenging industries and emphasizes how Backed is leading the charge in areas like AI-driven drug discovery, a field relatively untouched by VCs.
The funding landscape today
Clarity is Key for AI to Positively Impact Banking | FF Virtual Arena #330
Épisode 856
mardi 24 septembre 2024 • Durée 15:30
For AI to have a positive impact on banking, clarity is key.
On the latest FF News Virtual Arena, Allan Kissmeyer from SEB Bank explores the increasing role of evolving technologies in banking from his vantage point in the Nordic region.
SEB’s unique focus on large corporates in the Nordics means he can also weigh in on the importance of standardization, particularly through ISO 20022, as a foundation for leveraging the likes of AI, and offers a couple of timely concerns too.
Read on to find out more about what we discussed.
The conversation around AI
Allan Kissmeyer is the head of cash management at SEB Bank and knows a thing or two about how money is moving around Europe. Speaking to Tim Goodfellow, he’s able to offer some insights from a Nordic banking context but also explores the rise of central bank digital currencies (CBDCs) in Europe. SEB has a unique position in the market, supporting large corporates and financial institutions, a legacy that distinguishes it from other Nordic banks, particularly in the retail space.
Unsurprisingly, a major part of the conversation focuses on AI’s potential in banking. It’s something we’ve covered in many other conversations including this one exploring use cases in banking today. While AI is often hailed as transformative, Kissmeyer emphasizes that banks should proceed cautiously, particularly in the absence of clear regulatory frameworks. There’s no question however that AI offers significant opportunities, especially in enhancing internal processes like payment systems.
He highlights how cash management, which relies heavily on standardization and straight-through processing (STP), could benefit from AI by reducing inefficiencies caused by deviations in payment flows. However, Kissmeyer stresses the importance of building a solid foundation, such as the ISO 20022 standardization, before fully leveraging AI and other advanced technologies like blockchain. While ISO might seem like a behind-the-scenes development, its implementation represents a multi-billion-dollar investment critical to ensuring global financial stability.
Embedded finance is about driving financial inclusion
Why This USA Fintech Event is Not One to Miss | FF Virtual Arena #329
Épisode 855
mercredi 11 septembre 2024 • Durée 16:40
Why should fintech startups make the trip across the Atlantic for Money 20/20 USA 2024?
We find out the answers to all this and more in the second part of our conversation with Scarlett Sieber and Zach Anderson Pettet from Money20/20 as they discuss how the global ecosystem is represented at the conference and the unique opportunities it offers for networking.
There’s comments on the current fintech landscape and how these times can actually be seen as fertile ground for resilient, impactful startups to emerge.
If you haven’t already, check out part one of this conversation on our website.
Why you should attend Money20/20
In the second part of our conversation with Scarlett Sieber and Zach Anderson Pettet from Money20/20, Ali Paterson shifts the focus toward the event’s global relevance and the strategic importance for international fintech companies aiming to enter the North American market. It could be said that in the past, a US focus may have deterred some from making the considerable expense to attend. He asks why companies from Europe, Asia-Pacific, and Latin America should consider attending?
In response, Anderson Pettet lets us know about the evolving global nature of Money20/20. He highlights the increasing participation from regions beyond North America, particularly Asia and Latin America, pointing out that the event is not just about the US anymore; it’s about creating a global dialogue in fintech. In fact, more regulators from Latin America will attend this year than those from the US, reflecting the growing significance of the region, something we’ve touched on before. He argues that for any startup, attending Money20/20 provides unparalleled exposure and the opportunity to test ideas in a concentrated, high-stakes environment. It’s a chance to see if a strategy to enter the US market is viable before making a significant financial commitment.
A whole host of interesting speakers
What does the future of fintech look like?
What to Expect at Money20/20 USA 2024 | FF Virtual Arena #328
Épisode 854
mardi 10 septembre 2024 • Durée 17:28
This could be the second biggest thing happening in the US this Autumn…
Money 20/20 is one of the biggest fintech conferences in the world.
The US iteration kicks off in Vegas next month.
We had to find out what sets it apart and give those at the top an opportunity to argue the case for events like this and let us know what’s happening in the fintech space across the Atlantic.
Find out more below.
A lively discussion
In a lively discussion, Ali Paterson speaks to Scarlett Sieber and Zach Anderson Pettet, who both play pivotal roles in the strategic direction of Money20/20 globally.
The conference now takes place at 3 locations around the world, throughout the year, including Europe and Asia, earlier this year. You can watch our Money20/20 Europe coverage here.
Here, Pettet talks about his dual role as the Director of Content and VP of Fintech Strategy, which means he oversees the event’s global scope. The Fintech industry is constantly changing which, he says, necessitates a constant evolution in the event’s content to reflect current trends and future developments. Of course, AI gets a mention and regulatory changes are also impacting the industry in a big way so the event must continuously adapt.
Sieber, Money20/20’s Chief Strategy and Growth Officer, explains that her role involves managing the overall product of Money20/20, including content, marketing, and creative aspects. For her, surprising and delighting attendees is a key goal and notes that the way people engage with events has changed. New ways of doing things are needed and technology plays a key role in this. Of course, there’s lots of different stages and formats, such as the “Off The Record” stage and the “Press Briefing” stage, which they hope will create more engaging and transparent discussions.
Unique timing
Our panel also talks about how this year’s event will differ from previous years. Sieber points out that the 2024 event will be particularly significant, occurring just days before the upcoming , a significant moment in history if ever there was one. This of course adds an extra layer of relevance to the discussions on policy and regulation.
It’s Time to Make the ISO 20022 Shift | Santander | FF Virtual Arena #327
Épisode 853
jeudi 29 août 2024 • Durée 27:16
It’s time to make the ISO 20022 shift.
The new global standard promises to unlock a new era for banking. It could be time to get on board.
In a brand new FF News Virtual Arena, Ali Paterson spoke to Greg Murray from Santander Bank in the U.S. to find out more. Promising greater data richness and improved transaction efficiency, Murray explains how banks like Santander are heavily investing in the transition to ISO 20022 to meet regulatory deadlines and adapt their systems.
It’s a topic on everyone’s lips and something we’ve covered in other videos on our website, including this video on getting ISO 20022 ready in Cambodia, and this article looking at the benefits of making that shift.
There is some concern for how smaller businesses will cope with the shift and to help with this Murray says the transition needs to be a collaborative one. Read on to find out more.
The ISO 20022 transition
The financial industry is undergoing a significant transformation with the adoption of ISO 20022, a new global standard for exchanging electronic messages between financial institutions. It will replace older messaging formats like SWIFT MT, offering a more flexible, efficient, and data-rich way to process transactions and communicate across the financial landscape. But what exactly is ISO 20022, and why does it matter?
In our interview, Greg Murray, Managing Director of Treasury Services Product Management at Santander Bank in the U.S., shared his insights into the new standard and its impact on the global financial system.
What is ISO 20022?
ISO 20022 is an international standard that provides a common language for financial messaging. Unlike its predecessors, it is not just a format but a comprehensive methodology that includes a data dictionary and a set of guidelines for message creation and use. It is designed to handle a wide range of financial transactions, including payments, securities, foreign exchange, and trade finance.
Why ISO 20022 Matters
The Global Adoption of ISO 20022
Challenges in the Transition to ISO 20022
A Banker’s Perspective on ISO 20022
The Future of Small Business Financing | Luke Voiles – Pipe | FF Virtual Arena #326
Épisode 535
mardi 30 juillet 2024 • Durée 26:20
Could this be the future of small business financing?
After leading roles at Intuit and Square, Luke Voiles is shaking up the business financing space with exciting embedded capital platform Pipe.
In this insightful interview, CEO Voiles speaks to Ali Paterson about Pipe’s embedded financial services product, aimed at bypassing traditional, cumbersome funding methods.
We get his thoughts on the increase in sector specific software solutions and why he’s passionate about supporting small businesses. There’s some exciting plans in the ‘Pipe-line’ too. Hear about all this and more in this FF Virtual Arena profile.
The funding evolution
To explain what Pipe really offers we first need some context and Voiles helps with this. He goes through the evolution of funding for small and medium-sized businesses (SMBs), contrasting traditional methods with Pipe’s innovative approach. Traditionally, securing funding required businesses to present two years of audited financial statements and tax returns to banks, a process that was lengthy and required a proven history of consistent performance. This method, exemplified by SBA loans, made it difficult for newer or smaller businesses to access necessary capital, something he’s very passionate about, given his heritage.
His dad was a small business owner himself, and this along with the experiences that many small businesses faced during the pandemic has been a big part of why he’s taken this role.
We’ve seen numerous evolutions in funding since those days and more recently, companies like Square Capital, Stripe Capital, and PayPal Working Capital, have focused on single cash flow streams. By simplifying the problem to a narrow set of financial data, these companies could provide more streamlined and accessible funding solutions. According to Voiles, Pipe builds on this evolution by allowing any SaaS business to offer similar financial services to their customers, thereby democratizing access to capital.
The changing business landscape
Voiles also highlights a broader shift in how SMBs operate, noting that business owners no longer visit banks regularly. Instead many rely on specialized vertical software that addresses specific industry needs comprehensively. Examples include for pizza shops and for nail and hair salons, which offer end-to-end solutions tailored to their respective industries.
Future plans
Building a Bank for Smaller Businesses | NatWest, Bank of Ireland and Tuum | The Fintech Show #145
Épisode 638
lundi 29 juillet 2024 • Durée 12:49
Building a bank for smaller businesses.
In this fascinating episode of The Fintech Show, get an insight into how banks effectively serve SMEs today and in turn what those businesses are looking for from their bank.
James Holian from NatWest, Niall Devlin from Bank of Ireland and Edgardo Torres-Caballero from Tuum discuss the advanced technologies and data analytics that are needed to meet the diverse needs of SMEs and how banks can get tooled up to leverage them.
Of course, this has to be balanced with a human banking experience and our guests point out how essential this is to staying competitive in business banking. There’s thoughts on how SMEs adapt to the current economic climate and how partnerships and collaboration with fintechs are more prevalent than ever. It’s a must watch.
Digital Transformation continues
Digital transformation has had a seismic effect on modern banking already, but it’s always continuing. In this episode of The Fintech Show, Tuum CRO, Torres-Caballero, emphasises the necessity for financial institutions to make sure they’re ready for advanced technologies that meet the evolving needs of their customers.
He highlights that embracing digital platforms is vital for launching services rapidly and meeting customer requirements. By integrating APIs, banks can improve onboarding processes and risk validation, while fintech partnerships can enhance the overall customer experience. He also points out that digital transformation allows banks to bolster their data analytics capabilities and explore the potentials of artificial intelligence.
Moving away from a one-size-fits-all approach, this technology actually allows banks to better serve SMEs with differing needs. Modern, cloud-based technology is also essential for maintaining up-to-date, cost-effective systems that support sustainable growth and operational efficiency.
The balance between humans and digital banking
Innovating Trust: Reimagining Digital Asset Custody for Customers | G+D and Money20/20 | FF Virtual Arena #325
lundi 22 juillet 2024 • Durée 35:50
Reimagining digital asset custody for financial institutions’ customers.
Secure custody could be the key to mainstream institutional adoption.
That’s the topic of our latest FF Virtual Arena. This time around, Money20/20 Head of Content for Europe and the author of ‘Why DeFi Matters’, Ian Horne speaks to Alex Gatiragas, Director of Solution Experience at Giesecke+Devrient (G+D) to find out how the big players can balance open minded innovation, with building trust around digital assets.
In this fascinating conversation, Horne asks what it will take to see mainstream adoption and Gatiragas provides an insight into the current landscape. G+D themselves are entering this sector with a new product – ConvegoⓇ TruSafe – specifically designed to “enable financial institutions to ensure retail investors navigate the digital asset landscape with confidence”. As for the future of this technology, we hear about the role digital wallets could play and some game changing use cases too.
Be sure to check out our previous Virtual Arena, titled ‘Digital Asset Use Cases Are Ready To Explode’, in which we interviewed Gatiragas along with Sabih Behzad from Deutsche Bank and Teana Baker-Taylor from Crypto UK to find out more about this topic. This episode is the perfect follow on to that and shows how G+D continue to innovate in this area.
Banking Transformation in the Wake of Challenger Disruption | Hexaware, bunq and Wise | The Fintech Show #144
Épisode 639
mardi 9 juillet 2024 • Durée 11:14
Banking has been well and truly disrupted by the challengers.
In this episode of The Fintech Show, we find out what’s changed and how institutions of all sizes can now differentiate themselves in an increasingly competitive market.
Our stellar line up of industry experts includes Bianca Zwart from bunq, Peter-Jan Van De Venn from Hexaware and Arunan Tharmarajah from Wise.
Together they discuss growing pressures from tech-savvy consumers, differentiation through innovation and the impact of regulatory changes. We get some real business cases and hear about the partnerships that are making transformation possible.
Read on to find out more.
Differentiating features
In this episode of The Fintech Show, three industry experts delve into the primary drivers and implications of digital transformation in the banking sector. We were pleased to speak to Peter-Jan Van De Venn, VP Global Digital Banking at Hexaware (FKA Mobiquity), who emphasizes the critical role of customer demand in pushing banks to innovate. Hexaware are the experts when it comes to helping banks find ways of differentiating in a competitive market.
Typically consumers’ expectations are shaped by their experiences with tech giants like Google and Facebook, and increasingly challenger bank offerings. Of course, many banking apps share common functionalities—referred to as “must-haves”— so as a result, he says banks should focus their budgets on the remaining 20% of features that can differentiate them in the market. This strategic allocation enables banks to innovate effectively and economically, ensuring they stand out while maintaining a solid business case.
We were also delighted to speak to Bianca Zwart, Chief of Staff at bunq, the second largest neobank in Europe and a real trailblazer for customer centricity in the banking space. She discusses their mission to build a user-centric banking experience, something they’ve been focusing on since 2015.
Getting payments right is key
The conversation also covers the evolving funding landscape, particularly the sharp valuation drops in later-stage funding rounds. There’s definitely been a number of changes in the ecosystem recently, with more funding even coming from Private Equity. Here, De Haes provides an insightful and thorough breakdown of the post-2022 revaluation environment, explaining that while seed stage funding has only seen minor corrections, later rounds have experienced significant declines in valuation. Interestingly, he notes that these downturns provide opportunities for investors willing to cherry-pick undervalued but strong companies.
In one of the more forward-looking segments, they discuss the future of blockchain and decentralized finance (DeFi). De Haes shares his belief that the mainstream adoption of blockchain will happen largely “invisibly” through back-end applications that consumers may not even realize are leveraging blockchain technology. He envisions broader institutional adoption and even the possibility of government-backed blockchain systems in the future.
There’s also some valuable insights into what Backed looks for in founders. We’ve asked a number of other people in the industry what they look for and it’s interesting to see how their advice compares. De Haes emphasizes the importance of “founder-product fit,” grit, execution speed, and commercial acumen. He shares fascinating examples of founders like Quinn, who is revolutionizing liver therapeutics with AI, and the seasoned team behind Travisory, who are disrupting border management systems. For De Haes, it’s not just about finding brilliant founders but those with a unique “right to win” in their specific domain.
Watch the video to find out more about the London Fintech Network, and get even more detail on the above topics. It’s a really interesting insight into the world of venture capital. Watch more conversations just like this, on our website.
The conversation also covered another hot topic, embedded finance. In his view, this is not only about improving operational efficiency but also about driving financial inclusion, a central responsibility of banks. However, regulatory pressures rear their head again and Kissmeyer raises concerns about the conflicts banks face, particularly the challenge of balancing anti-money laundering (AML) requirements with open banking regulations like PSD2 and the forthcoming PSD3. He underscores the need for clarity and uniformity in regulations to avoid contradictory mandates that could impede progress in areas like financial inclusion.
Finally, the discussion moves to central bank digital currencies, specifically the digital euro, and their potential impact on financial systems. The prospect of a Digital Euro rollout is gathering steam and Kissmeyer expresses cautious optimism, noting that while CBDCs could enhance financial inclusion, their broader implications remain uncertain. The other thing is that in the Nordic region, the digital euro may have limited impact due to the existing currency ecosystem, but that’s not to say they couldn’t have digital currencies of their own.
It’s a great all round look at the state of technology in banking, and there are many more conversations just like this one on our website.
For Sieber the value of Money20/20 is as a platform for education and networking. The event offers more than just a chance to meet potential investors—it’s an opportunity to refine pitches, test ideas with a diverse audience, and forge partnerships. The US market might be challenging to crack, but the opportunities it offers, particularly at Money20/20, are unmatched and who knows where it could take your startup.
We also find out much more about the speakers and content at the event with Ali asking what excites our guests about the speakers. One thing that’s mentioned is how the content could potentially influence the direction of the global ecosystem and could have done in the past, if Money20/20 was around then. For Anderson Pettet, the most exciting moments are when startups emerge from stealth and end up being catapulted into the public consciousness, accelerating their growth.
Of course, while large stages and big-name speakers are exciting, some of the most impactful moments happen in smaller, more intimate settings. These can leave a lasting impression on the select few who experience them, showcasing the breadth and depth of the fintech community. Sieber also notes that the process of preparing speakers, especially high-profile ones, involves considerable behind-the-scenes effort to ensure that the content resonates and adds value.
We also get a broader reflection on the fintech industry’s current state, with Ali asking whether the industry should remain optimistic given the recent challenges, such as IPO speculations and venture capital shifts. Sieber remains optimistic, viewing the current reset as a necessary correction that will lead to more sustainable and impactful fintech businesses. She believes that the companies that can navigate these tough times will emerge stronger and become the new industry darlings.
And lastly, there may even be a couple of hints about things attendees can expect to see at this years event. Be sure to watch the video to find out more.
They also tease some of the high-profile speakers and topics that will be featured at the event, including discussions on AI, regulatory updates, and embedded finance. Speakers will include Lynn Martin, President of the New York Stock Exchange, and Danielle Omodei, CEO of Anthropic, who will provide insights into the future of Fintech and its intersection with emerging technologies.
It’s an energetic conversation, and you’ll definitely get a sense of the speakers’ deep enthusiasm for the event and the industry. And this is just Part 1. Watch out for Part 2 coming soon.
The standard was developed to address the limitations of older messaging formats like SWIFT MT, which have been in use since the 1970s, although as Murray points out SWIFT (the Society for Worldwide Interbank Financial Telecommunication) are very much championing this change. He points out that existing messaging systems are limited by their rigid structures and lack of support for the rich, structured data that modern financial transactions need.
ISO 20022 is not just about replacing old standards; it’s about enabling a new way of handling financial data. The move towards ISO 20022 is driven by several key factors:
Rich Data Handling: ISO 20022 messages can carry much more detailed information than older formats. This means more data can be transmitted in a single message, reducing the need for multiple messages to complete a single transaction. For example, it allows for up to 140 characters of remittance information, compared to the 35 characters allowed in SWIFT MT messages.
Standardization Across Markets: Currently, different regions and banks often use different messaging formats, creating complexity and inefficiency in cross-border payments. ISO 20022 offers a unified standard that can be adopted globally, simplifying processes and reducing the risk of errors.
Enhanced Compliance and Transparency: The new standard supports better data granularity and quality, which is crucial for meeting regulatory requirements. As Murray points out, regulators around the world are increasingly demanding more detailed and accurate data, and ISO 20022 provides a way to meet these demands.
Future-Proofing Financial Systems: With the increasing digitization of financial services, there is a growing need for systems that can handle large volumes of complex data. ISO 20022 is designed to be flexible and extensible, making it easier to adapt to future technological advancements.
The adoption of ISO 20022 is already underway globally, with many major financial institutions and market infrastructures moving towards the new standard. The transition is being spearheaded by SWIFT, which has set a roadmap for migrating its members to ISO 20022 by the end of 2025. This is the big deadline that most institutions are looking towards.
Murray noted that while the initial transition may pose challenges, the benefits far outweigh the difficulties. He emphasized that ISO 20022 is not just a compliance requirement but an opportunity for financial institutions to enhance their operations and offer better services to their customers.
For example, the European Central Bank (ECB) and the Eurosystem have already adopted ISO 20022 for their Target2 payments system, and other central banks around the world are following suit. In the U.S., the Federal Reserve has also announced plans to adopt the standard for its Fedwire Funds Service.
Transitioning to ISO 20022 is not without its challenges. One of the major hurdles is the need for significant investment in upgrading legacy systems to support the new standard. Financial institutions must also train their staff to handle the new messaging format and develop new processes and procedures to accommodate it.
Murray highlights that a common concern among financial institutions is the complexity involved in migrating from legacy systems to ISO 20022-compliant platforms. This transition requires not only a technical overhaul but also a cultural shift towards embracing data-centric operations.
Additionally, there is the challenge of ensuring interoperability between different systems and markets. While ISO 20022 aims to standardize messaging across the financial world, there will still be a period where both old and new systems need to coexist, which could create temporary friction and inefficiencies.
Murray, speaking from a major institution’s point of view, is optimistic about the future of ISO 20022 and believes that its adoption will bring long-term benefits to the financial industry. He views it as a critical step towards a more connected and efficient global financial system. “This is not just another compliance exercise; it’s a chance to rethink how we handle data,” he said. He also pointed out that while there will be short-term challenges, the industry must focus on the bigger picture – the potential for innovation, improved customer experience, and streamlined operations.
ISO 20022 represents a significant evolution in the way financial data is exchanged and managed. It is not just a technical upgrade but a strategic opportunity for financial institutions to modernize their operations, enhance data quality, and better serve their customers. As our interviewee emphasized, the move to ISO 20022 is an essential step in future-proofing the financial system for the digital age.
While the road to full adoption may be complex, the potential benefits – from increased efficiency and reduced costs to better compliance and more innovation – make ISO 20022 a game-changer for the global financial industry.
Pipe has capitalised on this shift by embedding financial services within these vertical software solutions. This approach allows businesses to access necessary financial products without navigating complex regulatory and financial risks. It’s perfect timing, and a super nifty product.
It’s designed to keep the balance sheet light, offloading risk by selling whole loans to capital markets. Voiles says this approach enables unlimited scaling potential. Pipe’s multi-draw line of credit is particularly attractive to SMBs, offering a security blanket that meets their needs without the onerous terms often found in traditional financing products.
Of course, we want to know what’s next for this exciting company. Looking forward, Pipe will expand. In addition to its capital products, they’re developing a card product for micro-merchants, which will be a 30-day charge card powered by Pipe’s risk engine. This product aims to fill a gap in the market, as existing solutions like those from Capital One and Amex do not cater to micro-merchants due to the high perceived risk. Pipe’s approach leverages cash flow data from POS terminals, enabling it to extend credit without personal guarantees or FICO-based underwriting.
Not only that but they also plan to introduce spend management and payroll services, fully embeddable within partner platforms. These additions will streamline expense management for SMBs, allowing them to focus more on their core operations. Of course AI gets a mention, as it often does these days, with Voiles hinting at a “moonshot” project involving an AI sidekick, which would automate business tasks and decision-making based on verticalized data sets.
It’s a really interesting profile piece of a passionate fintech leader who is behind a product that could revolutionize the capital space and have a genuinely positive impact on small businesses.
Be sure to watch more of our Virtual Arenas on our website.
Both James Holian, the MD of Business Banking at NatWest, and Niall Devlin from Bank of Ireland discuss the diversity of small businesses and the necessity for banks to offer both digital and human support. Holian says that NatWest aims to be the number one bank for small businesses in the UK by combining the best technology, whether developed in-house or sourced externally, to create exceptional customer propositions.
He makes the suggestion that banks today are essentially technology companies, with their products and services increasingly digitized and highlights NatWest’s commitment to providing dynamic, responsive services, facilitated by partnerships with various fintechs. Echoing Torres-Caballero’s thoughts above, this approach helps them leverage data to offer tailored financial advice and support for borrowing and growth, even amidst uncertain economic conditions.
Devlin, the Head of Business Banking at Bank of Ireland, takes us back to the most important stakeholders in this relationship and reflects on the resilience of businesses in the face of challenges such as Brexit, COVID-19, and global political instability. He notes that the current high interest rate environment presents an opportunity for banks to help businesses maximise their liquidity. He also underscores the critical role of technology in enabling efficient and effective banking services, from simple transactions to complex applications.
However, he does point out how important in-person services are, through branches and regional business centres. This dual approach ensures that Bank of Ireland can meet the needs of all customers, regardless of their technological proficiency. Interestingly, there’s also some thoughts about the bank’s efforts to support entrepreneurship through partnerships and educational initiatives.
Balance is key it would seem! Tune in to find out more and be sure to catch more of our great flagship shows on our website.
She interestingly points out that the traditional banking sector’s slow adaptation to user needs has opened the door for more agile, user-focused competitors. There’s no question that neobanking’s growth has been colossal and they’re gradually taking a greater market share. The rising demand for better, more adaptable banking solutions is forcing all players in the industry to innovate rapidly, fostering increased competition and diversity.
We also spoke to Arunan Tharmarajah, Head of European Banking and Payments at Wise, one of the key players in making payments more accessible. They have both provided an innovative solution to a problem and are now helping more traditional institutions to innovate themselves. Tharmarajah gives us insights into how banks can address the challenges posed by the evolving financial landscape, particularly in cross-border payments.
He goes on to explain that some banks prefer to partner with specialized firms like Wise for cross-border transactions, allowing them to focus on domestic services. Wise offers a solution that integrates with traditional banking infrastructure, ensuring seamless, low-cost international transactions. He also discusses the broader implications of regulatory changes, which are increasingly accommodating non-bank entities in the payment systems. This shift is expected to enhance competition, lower fees, and improve customer experiences globally.
Tharmarajah emphasizes the need for banks to adopt a customer-centric approach, moving away from siloed, product-focused models to more holistic, technology-driven solutions that meet the diverse needs of modern consumers.
All our speakers are very much in agreement that focusing on user-centric innovation, strategic partnerships, and efficient use of technology, will be key to banks survival in this competitive landscape. Finally the user comes first in banking.
We hope you enjoy this episode and stay tuned for more coming soon.
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